Summary
Growth in Poland's drug market in local currency terms is set to slow down over the next few years but should return to strength by the end of the forecast period. The main deflationary factors include the government stockpiling the reimbursement list with generics, at the expense of patented pharmaceuticals, and the possibility of even more stringent price restrictions. However, by 2012 growth should hit almost 6% in nominal terms, outpacing the rest of the economy, driven by rising GDP and increased consumer spending power.
In March 2008, the Ministry of Health has released a list of pharmaceutical and medical products eligible for full or partial reimbursement, along with the proposed reimbursement sums for each drug class. This declaration of reimbursement figures is a change from previous policy, in which the reimbursement levels were calculated in relation to the cheapest drug in a particular class. As expected, the new list has faced strong criticism from multinational drugmakers who believe that the measures are anti-competitive, and are fearful that the authorities are moving towards a system in which only one drug will be reimbursed in each therapeutic class.
In terms of company activity, this quarter has been quiet, with Hungary's Richter still digesting Polish drugmaker Polpharma after its multibillion move for the company at the end of 2007. BMI is confident that the deal will close by the end of this quarter after Polish regulators recently approved the transaction.
However, this has yet to spark a consolidation scramble amongst local manufacturers. Not that concentration is always a good thing. In fact, regulators are considering re-working legislation concerning drug distribution as they concerned that the major players have too strong a position and are stifling free competition.
Meanwhile, Poland has slipped two places to joint 11th in the Business Environment Rankings, due to improvements in competing markets. Poland has actually increased its score compared to the last quarter due to a strengthening of its economic structures, as perceived by our Country Risk team. However, corruption remains a problem as underlined by a recent scandal involving prescription fraud on the reimbursement list.
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